MGAD40H3 : Evaluating Strategic Profit Performance - ch.6
2 May 2011
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Diagnostic function : tracking the progress of organizational achievements against preset performance goals and strategies. Two measures of profit performance: effectiveness: extent to which activity achieves desired outcome, efficiency: level of resources consumed to achieve certain level of output. Three conditions to analyze profit performance: ability to measure outputs, existence of predetermined standard of performance, ability to use variance info as feedback to adjust inputs and/or process. Key to evaluating strategic profit performance is focus on certain accounting variables that inform managers of success of strategy. Computing profit plan variances in absolute and relative terms. Variance analysis: isolate significant deviations from expectations www. notesolution. com. Key insights into other aspects of business. Cost savings from experiment in production technology. Strategic profitability = profit (loss) from competitive effectivesness. Drive sales and lower operating expenses on profit wheel www. notesolution. com. Resources consumed to achieve implement product market strategy actual outputs.
